Bill Text: NJ S3988 | 2024-2025 | Regular Session | Introduced
Bill Title: Allows tax credit for expenses incurred for medical insurance premiums and deductible payments for certain taxpayers under gross income tax.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-12-19 - Introduced in the Senate, Referred to Senate Commerce Committee [S3988 Detail]
Download: New_Jersey-2024-S3988-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
SYNOPSIS
Allows tax credit for expenses incurred for medical insurance premiums and deductible payments for certain taxpayers under gross income tax.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing gross income tax credits for certain expenses incurred for medical insurance premiums and deductible payments, and supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Insurance deductible medical expense" means the amount of covered charges under a health plan that an individual is required to pay for services before a health plan begins to pay on a covered charge.
"Health plan" means an individual or group health benefits plan that provides or pays the cost of hospital and medical expenses, dental or vision care, or prescription drugs, and is provided by or through an insurer, health maintenance organization, the Medicaid program, the Medicare program, a Medicare+Choice provider or Medicare supplemental insurer, an employer-sponsored group health benefits plan, government or church-sponsored health benefits plan or a multi-employer welfare arrangement.
"Medical insurance premium expense" means the consideration paid by an individual to an insurer for the issuance and delivery of any binder or policy of insurance for a health plan.
"Medical insurance cost" means the total of medical insurance premium expenses and insurance deductible medical expenses.
2. a. A resident taxpayer shall be allowed a credit against the tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for medical insurance costs incurred by the taxpayer during the taxable year, as follows:
(1) for an individual filer or married individual filing separately with gross income not greater than $65,000 during the taxable year, the amount of the tax credit shall equal the difference between the medical insurance costs incurred during the taxable year, and 8.5 percent of the taxpayer's gross income; and
(2) for a married individual filing a joint return or individual filing as head of household with combined gross income not greater than $130,000, the amount of the credit shall equal the difference between the medical insurance costs incurred during the taxable year, and 8.5 percent of the taxpayers' combined gross income.
b. A taxpayer shall not be allowed a tax credit under this section related to any expenses for which the taxpayer claims a deduction pursuant to N.J.S.54A:3-3 or N.J.S.54A:3-5.
c. The director shall prescribe the order of priority of the application of the credit allowed under this section and any other credits allowed by law against the tax imposed under the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. The amount of the credit applied under this section against the tax imposed pursuant to the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. for a taxable year, together with any other credits, deductions, payments, and adjustments allowed by law, shall not reduce the tax liability to an amount less than zero.
3. No later than one year following the effective date of this act, the director, in coordination with the Commissioner of Health, shall advertise the availability of the tax credits allowed under this act for the purpose of encouraging residents to schedule and complete regular medical visits.
4. This act shall take effect immediately and apply to taxable years beginning on or after the January 1 next following the date of enactment.
STATEMENT
This bill would allow income-eligible resident taxpayers to claim a gross income tax credit for expenses incurred for medical insurance premiums and insurance deductible medical expense payments.
Specifically, the bill provides that an individual filer or married individual filing separately would be allowed to claim the credit, provided that the taxpayer has gross income not greater than $65,000 during the taxable year. The bill also provides that a married individual filing a joint return or an individual filing as head of household may claim the credit, provided that the taxpayer's combined gross income is not greater than $130,000 during the taxable year.
Under the bill, the amount of the tax credit would equal the difference between: (1) the total of insurance deductible medical expenses and medical insurance premium expenses incurred by the taxpayer during the taxable year, minus (2) 8.5 percent of the taxpayer's gross income for the taxable year.
Under current law, taxpayer are allowed to claim gross income tax deductions for certain medical expenses, including a deduction for certain medical expenses paid in excess of two percent of the taxpayer's gross income. Self-employed individuals may also claim a deduction for amounts paid for insurance constituting medical care. This bill prohibits a taxpayer from claiming the tax credit authorized in this bill related to any expense for which one of these deductions is claimed.
The bill also requires the Director of the Division of Taxation in the Department of the Treasury to coordinate with the Commissioner of Health to advertise the availability of the tax credits allowed under this bill.
